Convergence of Television and Internet is getting closer and closer. Netflix puts itself in the middle to be a participant in the market of allowing users to watch movies and TV shows through downloads on their PC. Although the amount of movies is limited at this point, it is important to note that Netflix is betting its entire operating income of $40MM to gain traction in this area. We see three potential strategies here: 1) become a first mover in this space to establish the Netflix brand as an ultimate online movie and entertainment destination 2) combat Blockbusters encroaching market share for online video rentals 3) set themselves up for acquisition by one of the leading TV networks, such as Viacom, Fox, who are unable to move as quickly as the pure online shops are. We saw this with YouTube, MySpace and others.